Thailand’s challenges on TPP framework
The Nation | 15 February 2016
Thailand’s challenges on TPP framework
by Kavi Chongkittavorn
Thailand has decided to join the Trans Pacific Partnership (TPP). That will be the key message Prime Minister Prayut Chan-o-cha will deliver to President Barack Obama at the special Asean-US meeting today and tomorrow at Sunnylands, California.
The country has taken half a decade of flitting around this premium free-trade framework before making the decision.
Compared with Vietnam’s and Malaysia’s timely nods, Thailand could have joined much earlier and enjoyed the same privileges of founding members in drafting and negotiating the overall 6,350-page document, including main text, schedules and annexes.
Back in October 2010, former Prime Minister Abhisit Vejjajiva wanted Thailand to join the TPP, knowing full well it would benefit the country’s exports, draw in investment and expand economic growth.
The market size of TPP was around 800 million people with combined GDP of US$27.5 trillion, covering 40 per cent of the global economy. Abhisit asked relevant agencies to study this and come up with recommendations quickly. But unfortunately, there was no follow-up due to the political turmoil in the country. Adding to the complexity, any decision dealing with an international treaty would need approval of the National Assembly according to Article 190 in the now-defunct 2007 charter. At the time, everything seemed so dysfunctional. Malaysia then became the ninth member of TPP in the same month.
Subsequently the incoming government under Yingluck Shinawatra also took up the idea through the instruction of her brother, Thaksin, living overseas. Ahead of Obama’s visit, the Thai trade negotiators were still very much anti-TPP - thinking the country would lose more than normal free-trade agreements with foreign trading partners, especially on labour standards, food security and health.
Truth be told, anything that involved the US often raised eyebrows and irked the Thai opinion leaders and public at large. Such deep-rooted antipathy dates back to the financial crisis in 1997 when the US refused to come to the rescue, which caused a big scar on Thai-US ties. The US is no longer the favourite country for Thai people, as it used to be.
During Obama’s visit to Bangkok in November 2012, Yingluck told him that Thailand was interested in the TPP negotiations — that much was clear. However, after he left town, nobody seriously followed up, knowing full well such posturing had been necessary to add value to Obama’s visit.
During the recent visit of Assistant Secretary of State for East Asian and Pacific Affairs, Daniel Russel, Thailand and the US agreed to negotiate a trade and an investment framework agreement, known as TIFA, which had been going on for years without much progress. Back in 2003-2005, with the all-round sense of deja vu between Thaksin and President George W Bush, both nations negotiated a free-trade framework which quickly collapsed over drug patents and intellectual property rights.
Both Vietnam and Malaysia did very well in negotiating with other members, especially the USA. Their leaders made a strategic decision to do so for long-term objectives. Once, they did, they worked out their negotiating plans and consulted with relevant stakeholders.
Vietnam negotiators said that as a founding member, it had more say and bargaining power to negotiate the best deal over sensitive issues such as labour standards, future of SOE (state-owned enterprises), government procurement and protection of intellectual property rights. They even thanked the US for helping with the process.
Some senior Thai officials are now saying that if Vietnam, which is considered a socialist, not yet a full-fledged capitalist economy, could complete so many free-trade agreements, then Thailand should be able to do the same.
At present, Vietnam has concluded 16 free trade agreements including with the EU, Eurasia and others. It is negotiating the Regional Comprehensive Economic Partnership (RCEP) and other Asean-led free trade frameworks.
In addition, Malaysia’s experience also clearly reflects Thailand’s complete lack of strategic thinking. Targeting horrible human trafficking for years, Kuala Lumpur got away scot-free despite its blemished record, more than officials would like to admit. Last year Thailand worked hard to impress the US but failed. This year it remains to be seen how Washington will treat the Thai responses to its demands on the prosecution of culprits.
Before joining the TPP, Malaysia also faced similar fears and strong public objections related to the high price of medicines due to stronger patent protection, the effects of the status of halal foods and most importantly, the bumiputera [Malay race] agenda - among hordes of other issues. As the negotiations progressed, it was all too clear that founding members had bargaining power and must work together — both give and take — to complete the deal. The Malaysian Parliament was quick to approve the TPP on January 27, ahead of the signing ceremony on February 4.
For the record, Malaysia held a total of 176 sessions from 2013-2015, with stakeholders from various interest groups for feedback and updates. Some of them were given access to the agreement, which was treated as a super secretive document during negotiations.
Now Thailand is still not a TPP member and likely to stay that way for at least two years — until all TPP members approve the deal. Only God knows what could happen during this interim time as new developments inside Thailand could easily hamper any TPP decision.
The best thing to do now is very clear — the country must unilaterally amend laws and regulations that would make it attractive for foreign investors and traders. In other words, Thailand can become a virtual TPP member. If the country makes all the changes on its own volition, then perceived anti-US sentiment would not be evoked as in the past. After all, Thailand is currently negotiating the RCEP and other free-trade agreements with several countries which require changes in domestic laws. These amendments are complementary in nature.
There is no need to wait for the invitation and overall readiness as some Thai scholars have argued. Just do it. Then, all concerned agencies must tackle the affected sectors and find remedies ahead of time.
The problem is: Will the concerned officials genuinely work for easier access to do business and invest in Thailand as the hub of Asean and the Asia Pacific? Or, will they just follow the same routine — expressing concerns and asking for more time for feasibility studies to avoid taking responsibility themselves?
The nation is quickly losing its competitiveness vis-a-vis neighbouring countries over the automobile, electronic, computer, garment and textile sectors.
Thailand must act now.
